The EUR/USD currency pair is currently trading below the 1.0400 threshold in early trading on Tuesday. After experiencing a bullish start to the week with a gain exceeding 1% on Monday, the pair faced renewed pressure as the US Dollar gained momentum in response to trade tensions resulting from tariff threats made by President Trump. This shift in sentiment prompted a dip below the key level of 1.0400.
Despite this correction, the losses in the EUR/USD remain contained. The EURO is showing resilience, as evidenced by strong gains in EUR/CAD and EUR/MXN pairs, indicating that the EURO is effectively absorbing capital shifts from both the Canadian Dollar and the Mexican Peso amidst the current risk-off environment.
On the economic front, there are no significant macroeconomic data releases scheduled in the US for Tuesday. As a result, market participants are likely to focus on overall risk assessment. Should major US equity indices experience declines following the recent long weekend, the US Dollar could maintain its strength, further pressuring the EUR/USD downward.
In terms of technical analysis, the EUR/USD ’s recent pullback has not eroded the underlying bullish sentiment. The Relative Strength Index (RSI) remains above 60 on the 4-hour chart, indicating ongoing bullish momentum. The immediate resistance levels to watch are between 1.0390 and 1.0400, which coincide with the 200-period Simple Moving Average and the Fibonacci 50% retracement of the latest downward trend. The ability of the pair to stabilize above this region may bring about the emergence of the next resistance levels at 1.0440 and subsequently at 1.0500.
On the support side, key levels to monitor include 1.0350, corresponding to the Fibonacci 38.2% retracement, 1.0320, represented by the 100-period SMA, and 1.0290 at the Fibonacci 23.6% retracement.
